Mentalization is the process by which an observer views a target as possessing higher cognitive faculties such as goals, intentions and desires. Mentalization can be assessed using action identification paradigms, in which observers choose mentalistic (goals-focused) or mechanistic (action-focused) descriptions of targets actions. Neural structures that play key roles in inferring goals and intentions from others observed or imagined actions include temporo-parietal junction, ventral premotor cortex and extrastriate body area. We hypothesized that these regions play a role in action identification as well. Data collected using functional magnetic resonance imaging (fMRI) confirmed our predictions that activity in ventral premotor cortex and middle temporal gyrus near the extrastriate body area varies both as a function of the valence of the target and the extent to which actions are identified as goal-directed. In addition, the inferior parietal lobule is preferentially engaged when participants identify the actions of mentalized targets. Functional connectivity analyses suggest support from other regions, including the medial prefrontal cortex and amygdala, during mentalization. We found correlations between action identification and Autism Quotient scores, suggesting that understanding the neural correlates of action identification may enhance our understanding of the underpinnings of essential social cognitive processes.